Google, Amazon and Starbucks Face Questions on Tax

LONDON -- Multinational companies are paying little or no tax on their earnings in Britain, angry lawmakers charged Monday at an unusual hearing involving Starbucks, Google and Amazon.

Legislators were skeptical, for example, about the coffee chain Starbucks' claim that it is not making profits in Britain.

In sometimes bitter exchanges, legislators said they could not accept that Starbucks had reported losses for all but one of the 15 years it has operated in the U.K., suspecting the firm was attempting to minimize the taxes it pays in Britain.

"You have run the business for 15 years and are losing money and you are carrying on investing here. It just doesn't ring true," said Margaret Hodge, head of Parliament's Public Accounts Committee.

Troy Alstead, Starbucks global chief financial officer, acknowledged to the panel that its taxable profits in the U.K. are calculated after royalties paid to its European headquarters in the Netherlands have been deducted. Alstead acknowledged that it has a special tax arrangement with the Dutch government covering its headquarters.

Companies operating in Europe can base themselves in any of the 27 EU nations, allowing them to take advantage of a particular country's low tax rates.

Alstead insisted that Starbucks was not seeking to mislead investors or tax authorities about its performance in Britain.

"We are not at all pleased about our financial performance here. It is fundamentally true everything we are saying and everything we have said historically," he told the committee.

Last week, Britain and Germany called for the world's largest economies to do more to collaborate to fight tax evasion, particularly in online commerce.

Legislators were also questioning executives from Google and Amazon about their tax affairs in Europe.